ACA Expansion Populations in Maryland’s All-Payer Model: Lessons from the Johns Hopkins Medicine System

Maryland’s unique all-payer model, based on a 36 year old Medicare waiver to allow the state to adopt policies aimed at reducing per capita hospital expenditure and unit cost, and driving patient quality outcomes, has produced a mixed bag of economic incentives for payers and providers alike. When coupled with the 2010 Affordable Care Act expansion, large health systems such as Johns Hopkins experienced the opposing centripetal forces of a large volume increase, driven by significant coverage gains and reductions in uninsured rates, particularly among low-income populations broadly as well as within specific vulnerable populations, while simultaneously shrinking the available reimbursement pool and shifting risk allocations toward higher-risk, unhealthier patients. This paper explores the tension between newly-competitive facets of a major healthcare system, Johns Hopkins Medicine, and traces the ways in which the hospital and provider elements are reversely incentivized as compared to Johns Hopkins Healthcare, Hopkin’s in-house payer. Johns Hopkins Healthcare boasts one of the largest Managed Care Organizations in the state of Maryland, with over 25% of market share. In conducting a 2-year longitudinal analysis of durational medical loss ratios, I find that the Medicaid expansion populations - especially the enigmatic Childless Adult cohort - was improperly risk-adjusted by the state of Maryland’s risk adjustment algorithm, in spite of relatively robust - and profitable - representation in the hospital and provider settings. In October 2018, the findings of this work led to a walk-back of Maryland’s risk-adjustment modeling in favor of Hopkins’ findings surrounding the revenue of Childless Adults, and a corresponding increase of 1.7% of JHHC’s Medicaid revenue.